Understanding financial statements can feel like decoding a foreign language for many ecommerce folks. It’s like trying to read a book without knowing the words. Sometimes, the problem isn’t that you don’t get it, but rather that the financial blueprint you’re using doesn’t match your ecommerce business.
Building this blueprint starts with your Chart of Accounts. The choices you make when building this chart will shape your entire business journey. So, what is the Chart of Accounts and why is it so important for ecommerce?
Think of it as your financial organizer. It helps you make sense of your numbers and run your business better. So, what makes a great chart of accounts for ecommerce businesses?
Simplifying Your Accounts
Don’t be afraid to group similar expenses together. For example, you could have one account for “Supplies” that covers cleaning stuff and office supplies like paper, ink, and staples. These things are crucial for your daily business, so keeping them in one place makes sense. Having too many separate accounts can get confusing.
At bookskeep, we provide our ecommerce clients with a custom chart of accounts. It’s designed to track all the money you make from different places and the fees that come with it. This way, your financial reports become more accurate, giving you confidence in your financial decisions.
Clear Summary Reports
With today’s online accounting tools, you can dig deep into your numbers and create all sorts of reports. But the trick is to make those reports short and sweet. Think of them as the “big picture” reports that show you how your business is doing overall. Sure, you can dive into details when needed, but these summaries help you see the health of your business and areas that need attention.
Focus on the Important Numbers
When you’re pulling financial data, concentrate on costs directly related to the stuff you sell. One crucial number to watch is your “gross margin.” Make sure your costs are in the right category on your financial statement. This helps your accounting system calculate your margin correctly. Also, keep income and expenses that aren’t part of your business in categories like “Other Income” or “Other Expenses.” That way, they won’t mess up your profit calculations.
Tailor Your Chart
If you know what information you need, your accounting software can do the heavy lifting for you. Build your chart of accounts and your reports to show you this info easily each month. When you need to dig into the details, the software’s got your back. This saves you time – something every business owner can use more of!
In the end, creating a customized chart of accounts for your ecommerce business is crucial to tracking every dollar you earn. Just looking at your bank balance won’t cut it. Paying attention to the details matters, especially when it comes to taxes. Learning ecommerce financials is easier when you have the right guide, like an ecommerce bookkeeper, and a solid money map to start with.
If you’re ready for a clean chart of accounts or more help understanding your financials, bookskeep can help. Reach out to the bookskeep team to get started today!
If your ecommerce business isn’t where you’d like it to be in terms of profitability, check out my book, Profit First for Ecommerce Sellers. It answers important questions about how to implement Profit First in an ecommerce business. Take control of your money and your business, and put Profit First to work for you!
You can also sign up for the Profit First for Ecommerce Sellers Online Course. As a Mastery Level, Certified Profit First Professional, I will teach you why Profit First works so well for ecommerce businesses and the particular challenges for businesses that have physical products requiring inventory management. You will learn how your behavior drives your money management habits for your business and how you can set up your business bank accounts to work with your habits.
Check out all our ecommerce accounting and profit advising services here!
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